Few GST considerations to be made by new entrepreneurs

GST or Goods & Services Tax is considered to be a consumption tax which is caged on majority of the services and goods sold in the country, irrespective of where the business is located. All businesses subjected to specific exceptions are needed to charge GST, presently at about 5% along with the applicable sales taxes. The business is said to act effectively as a Revenue agent for the government by collecting taxes and having them remitted periodically. Businesses are even permitted to claim taxes which are paid upon expenses incurred, relating to their specific business activities. These are known as Input Tax Credits.

Is there a need for the business to register?

Before engaging in any type of commercial activity, the entrepreneurs are required to determine the amount of GST as well as relevant taxes apply to their business. as a matter of fact, all businesses selling services and goods in the country for profit, do require to charge GST, but not in the following situation:

  • Estimated business sales for four consecutive calendar quarters to be expected lesser than a given amount. The revenue department views such businesses as small suppliers. Hence, they are exempted.
  • Business activity is considered to be GST exempt. The exempted services and goods include child care services, residential land & property, health & medical services, etc.

Even though GST filing is not necessary for the small supplier, in few cases, it can be found to be beneficial. As the business will be able to claim only Input Tax Credits (with expenses paid by GST) if they get registered, several businesses, more specifically during the initial phase, where sales is exceeded by expenses, tend to find that significant tax amount can be recovered by them. this needs to be adequately balanced against potential competitive benefits achieved by not charging GST and additional administrative expenses from requiring to file the returns. gst accounting software is the right way to get the accounts in correct shape.

How to register

Before registering, it is necessary to make sure that all relevant information are present including organizational structure, location, name, fiscal year end pertaining to the business. Registration can be done online or taking some professional’s assistance.

How often GST is to be filed?

The revenue department allows GST returns in getting field annually, quarterly or monthly, which will depend upon business annual sales. Going through the official website of the revenue department will help the entrepreneur to know under which bracket his business falls into, so that he can know whether to file GST returns monthly or annually.

As sales tax could accumulate thus leading towards significant liability, selecting a much more frequently based filing period is likely to make good sense, if the entrepreneurs feel lacking of discipline towards segmenting the funds. Besides this, frequent filing period is likely to be more beneficial, if more expenses are expected when compared to sales, as the business would be entitled to get refund. With gst software price reducing, it is high time that entrepreneurs got one for their organization.